Future of Active Adult Could Lie in Delicate Balance of Health Care, Lifestyle

Baby boomers are likely interested in accessing some health care services in active adult communities — but they might not want to call it “health care.”

Driven by a belief that older adults want a product that stands apart from traditional independent living communities, developers are creating a new generation of for-rent active adult properties across the United States. Many active adult developers and owners are building communities that resemble multifamily apartments, with a slightly more robust framework of amenities, services and programming on top.

Rarely do these communities include a health care component — but there is evidence that doing so might be a good idea, especially as more baby boomers age into the property type. And some large players in the field — including Toledo, Ohio-based real estate investment trust Welltower (NYSE: WELL) — are finding creative ways to introduce health care into active adult communities, while still keeping consumer preferences for a lifestyle-driven experience at the forefront.

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Unlike the Silent Generation that came before them, the baby boomers are less comfortable living in an overly institutional or clinical setting, according to Ryan Haller, a former chief development officer for Oregon-based Avamere Companies who now heads up a senior living consulting practice called Orchard Hill Partners.

“They’re anti-senior living, and many of them also feel that independent living is just too restrictive,” Haller said during Senior Housing News’ Virtual Active Adult Summit last month.

But boomers — like all the generations before them — will encounter more health care needs as they age. That creates a twofold challenge: active adult providers would do well to find a way to meet some of these health care needs in order to attract prospective residents who will possibly need them, while also keeping communities feeling vibrant and not overly clinical. Including some health care in lower-acuity senior housing settings has other potential rewards for providers, too, such as increasing length of stay and driving customer satisfaction.

One way to do that is by offering more preventative health care services that fall into the sphere of wellness, such as having access to healthy food, fitness, mental health and spiritual offerings. Another way is to join forces with providers of Medicare Advantage (MA) or other third parties to integrate health care services into the property type.

But owners, developers and providers of active adult communities that want to break the mold should first figure out what residents truly want out of the product type before they want before implementing more health care services in their communities, according to Mark Shaver, senior vice president of strategy at Welltower.

And, it’s still not clear how integrating health care services into active adult will affect the value of those communities, if at all.

“My logic would tell me that … the more amenities, hopefully that brings more residents and brings more stability to our occupancies and our net operating income,” Haller said.

MA meets active adult

There are many philosophies and a few emerging models for integrating health care services into senior housing communities, and Welltower employs a few different concepts across its senior housing segment, which includes over 1,300 communities in North America.

One example is its Clover senior apartment portfolio, which consists of 35 age-restricted apartment complexes in New York, Pennsylvania, Ohio and Las Vegas. These communities typically have an average of 120 units and carry rates of about $1,100 to $1,200 per month, Shaver said during the recent Senior Housing News Active Adult Virtual Summit.

When Welltower first acquired that portfolio last year, the communities didn’t have any care integration. But the company struck a partnership last fall with Geisinger, a health system that serves more than three million patients across 45 counties in Pennsylvania and New Jersey, to integrate its care programs with some Clover locations in Scranton, Pennsylvania.

Under the partnership, Clover’s residents enrolled in Geisinger’s Medicare Advantage (MA) plan have benefits that include access to the health system’s new 65 Forward clinics. The concept is geared toward providing primary care and wraparound services — both clinical and more lifestyle-based — in order to support older adults’ wellbeing and help with chronic care management as they age. The program also also reduces residents’ associated health care costs, according to Shaver.

Geisinger has opened two 65 Forward clinics so far, with one located between two Clover communities in Scranton, Pennsylvania. About 35% of Clover’s residents in Scranton are on Geisinger’s Gold Plan for their health insurance benefits— and that has come in handy during the Covid-19 pandemic, as it’s helped them access care remotely through telehealth.

Another example of how Welltower integrates senior housing and health care is its partnership with Anthem (NYSE: ANTM) affiliate CareMore. Under CareMore’s “Touch” model, interdisciplinary teams of medical professionals such as physicians and nurse practitioners tend to patients where they live, including senior living communities. The program is supported by Anthem’s institutional special needs MA plan.

Welltower currently employs the program in more than 30 of its communities, with between 350 to 450 residents currently enrolled. The program has cut emergency room and urgent care visits among residents by 50% compared with normal Medicare beneficiaries. It has also helped trim resident medication use, from an average of 12 per beneficiary to about 5, according to Shaver.

“It’s been a very good use case on being able to do what we had hoped: improve the outcomes, improve costs to us, improve length of stay and have the care component funded by the government through the Medicare Advantage program,” Shaver said.

Looking ahead, Welltower hopes to scale the partnership to about 50 communities by the end of this year.

But Shaver stresses that these are still the early days of bringing health care to active adult, and that there is still much to learn about the application of these programs.

‘Their ears definitely perk up’

One of the biggest challenges in integrating more health care services into active adult communities has to do with how it’s presented to residents. Although baby boomers will almost certainly experience the health challenges of previous generations, the last thing they want is to live in what they see as an institutional or “nursing home” type setting.

“There’s the old saying that Bob Hope will never die in a nursing home, and it’s the same with these folks,” Haller said. “They don’t want to have anything to do with senior housing, [but] active adult, their ears definitely perk up.”

One particular danger is that senior housing providers that focus on health care offerings will inevitably attract an older resident base — and that is hard to reverse.

“The problem when you start going too much into health care is that your age creeps up,” Haller said. “Let’s say you acquire an active adult community and the average age is 78 or 79. Chances are, that active adult community will never have an average age of 72 or 73.”

But that doesn’t mean senior living providers must shirk clinical services altogether, either. At its core, wellness is preventative health care. Senior living operators can join forces with third-party service providers, such as physical therapy or dietary clinicians, to help with resident outcomes down the road, Haller said.

That may include co-locating active adult and third-party medical services, as Haller suggested, or integrating them together in another way. The trend is already informing some of the projects Haller has in the works.

For instance, he is involved in a senior housing development startup that will focus on “11 dimensions of wealth,” a concept that goes beyond the traditional seven dimensions of wellness. Leading that charge will be a “wealth counselor” who guides residents through those 11 dimensions.

All of this likely means that active adult communities will continue to become more sophisticated, — but the right blend of health care and lifestyle will ultimately be determined by active adult residents’ preferences.

“For those providers that are in the space right now, walk, don’t run,” Haller said. “Because I think we all need to listen with an active ear to what the consumer wants.”